An Airbus A321 is being assembled in the final assembly line hangar at the Airbus U.S. Manufacturing Facility in Mobile, Alabama.
Michael Spooneybarger | Reuters
Aircraft leasing firm Air Lease, founded by industry mogul Steven Udvar-Házy, agreed to sell itself in a deal that would take it private to a group of investors for $7.4 billion, ushering in more consolidation in the airplane-renting business.
The planned acquisition, announced Tuesday, was led by Japan’s Sumitomo and SMBC Aviation Capital, and also includes asset managers Apollo and Brookfield. Shareholders in Los Angeles-based Air Lease would receive $65 per share, a nearly 8% premium to Friday’s close. Including debt, the investors are valuing the company at about $28.2 billion.
Lessors rent aircraft to airlines, helping those carriers conserve cash they’d otherwise have to use to buy planes that can cost more than $100 million apiece at list prices. A shortage of aircraft in recent years — driven by the Covid-19 pandemic, supply chain problems and other slowdowns — has pushed rental rates to records for both new and older models alike.
The aircraft leasing business, which owns more than half the world’s fleet of passenger jets, has grown from a 51% ownership share in 2009 to a 58% share currently, according to aviation consulting firm IBA Group. It hasn’t seen more growth because some large airlines became profitable, allowing them to own many of their planes.
“Cash is not alien to these guys anymore,” said Stuart Hatcher, chief economist at IBA Group.
At the same time, many airlines are now rethinking their capacity plans as an oversupply of flights has weighed on fares and eaten into their profits this year. On the extreme end, Spirit Airlines on Friday filed for Chapter 11 bankruptcy protection for the second time in less than a year after it failed to make major changes the first time around and emerged with high costs and a drop in demand.
The take-private deal underscores a wave of consolidation in the industry, and will help the companies grow their scale. Air Lease ended the second quarter with 495 planes in its owned fleet.
Including its backlog, Air Lease is the fifth-largest aircraft lessor, according to a tally by IBA. The parties expect the deal to close in the first half of 2026. The new company will be based in Dublin.
“It makes perfect sense when you consider it’s … the cheapest way to buy market growth,” said IBA’s Hatcher.
Recent deals
The Air Lease acquisition is the latest in a string of deals.
General Electric sold its aircraft leasing arm to No. 1 airplane lessor AerCap in 2021 as the conglomerate was spinning off units to focus on major businesses such as airplane engine manufacturing.
Two years ago, Standard Chartered agreed to sell its aircraft leasing business to AviLease, which is owned by Saudi Arabia’s sovereign wealth fund.
Steven Udvar-Hazy, chairman of Air Lease Corp., poses for a photograph after speaking at an Aviation Club lunch in London on Sept. 13, 2018.
Simon Dawson | Bloomberg | Getty Images
Often dubbed the “godfather” of aviation leasing, Udvar-Házy founded Air Lease in 2010, working closely with Air Lease CEO John Plueger.
“Since founding Air Lease in 2010, we have been unwavering in our mission to shape the future of the aviation industry and provide airlines around the world with access to the most modern, fuel-efficient aircraft,” Udvar-Házy said Tuesday.
Udvar-Házy, who fled Soviet Hungary with his parents in the late 1950s, has had a lifelong love of aviation and has often been credited with creating the aircraft leasing business. He co-founded his previous leasing company, later known as ILFC, in 1973, and it was later sold to AIG. He continued to run it until 2010 and announced his retirement from Air Lease this past March.
